(ATF) Hong Kong: Financial markets were lifted by beaten down stocks after the US Federal Reserve chairman reiterated the central bank’s commitment to support the economy.
Fed chief Jerome Powell said in his two-day testimony: “We remain committed to using our tools to do what we can, for as long as it takes, to ensure that the recovery will be as strong as possible, and to limit lasting damage to the economy.”
The dollar was boosted by comments from Chicago Fed President Charles Evans who said the US central bank could start raising interest rates even before it starts averaging 2% inflation. Evans is due to become a voter on the Federal Open Market Committee in 2021.
Investors, meanwhile, are monitoring the US-China tensions as Beijing denounced the US-endorsed deal between TikTok and US companies Oracle and Walmart.
China has said it will not back the deal in its current form after ByteDance has said it would create a US "subsidiary", TikTok Global, that will be part-owned by Oracle and Walmart. But US President Donald Trump has said his administration would not approve the sale of TikTok to Oracle and Walmart if China's ByteDance maintains any control.
In other news, Australia’s S&P ASX 200 outperformed the region with a gain of 2.42% on expectations the central bank will cut interest rates, while China’s CSI 300 benchmark rose 0.36% and Hong Kong’s Hang Seng benchmark advanced 0.11%.
But Japan’s Nikkei 225 edged down 0.06% after markets opened following the long holiday weekend.
“The Reserve Bank of Australia is increasingly expected to complement the Budget announcement on 6 October with more monetary easing,” DBS Bank said in a note. “RBA deputy governor Guy Debelle said that it would take at least three years before the Australian economy can achieve full employment that pushes up inflation.”
The US dollar rose against a basket of currencies to trade above 94 for the first time since July and the rebound in the greenback took the shine off gold, which is trading 0.4% lower at $1,893 per ounce.
“The US dollar is trading at 2-month highs, following surprisingly optimistic comments from Fed policymakers overnight. Fed Chair Jerome Powell said that the US economy stood resilient throughout the coronavirus crisis, whilst Fed official Charles Evans said that the US economy had returned to 90% of pre-pandemic levels, adding that the Fed could raise interest rates before the 2% average inflation target is reached,” Fiona Cincotta, a market analyst at Gain Capital, said.
ATF China Bond 50 Index: China bonds little changed as foreign interest wanes
Also on Asia Times Financial:
# Japan’s Nikkei 225 index was down 0.06%
# Australia’s S&P ASX 200 leapt 2.42%
# Hong Kong’s Hang Seng index edged up 0.11%
# China’s CSI300 added 0.36%
# The MSCI Asia Pacific index advanced 0.38%.
Stock of the day
Fosun Pharma rose as much as 9.4% after it said it had received Chinese approval for a clinical trial for the treatment of moderate to severe glabellar lines. It said that as of the date of the announcement, no Botulinum Toxin product of Type DaxibotulinumtoxinA was launched for sale in China.